Tag Archives: thinking out loud

Why it’s ok for graduates when a company broadens recruitment

There has been a lot of excited comment about Penguin’s decision to open out their recruitment process to people who have not been to university. Some people have seen it as a sign that a degree is not as valuable in the workplace, and some links have been made to other companies broadening their talent searches. But to me, it seems like a perfectly reasonable move, and nothing to get too excited about. Why is that?

Firstly, publishing, as an industry, is not as diverse as it could be. In 2014, 86% of graduate entrants to the industry were white (as opposed to 79% of graduates), 85% had 2:1 or above (as opposed to 68% of graduates) and 61% came from a area of high participation in university, as opposed to 54% of all graduates. The book publishing industry is normally even more socially selective than the industry as a whole. Any measure that addresses this is to be applauded, although, I don’t think it’s too cynical to suggest that Penguin are probably still going to recruit a lot of white, middle-class graduates.

Secondly, it’s clear from even a cursory glance at employment data for the industry, or vacancies, that some of the jobs that will be on offer don’t need a degree, and that’s fine. Just like every other industry, publishing needs office clerks, sales administrators, goods packers, receptionists and other roles which are vital to keep the company running, but don’t need a degree. Last year, just 38% of new graduate recruits to the publishing industry said they absolutely needed their degree for their new job (another 35% said it wasn’t an absolute requirement, but it did help). Graduates have options in the current market, and it does them little harm for employers not to ask for degrees for jobs that don’t need them.

Thirdly, I keep talking about skills shortages, and publishing is not immune. This year the Higher Education Statistics Agency, HESA, are projecting that, for the first year in some time, we will have fewer graduates than in 2015. Yes, that’s right. We already have shortages, we’re likely to have more vacancies this year, and we’re likely to have fewer graduates, in total, than last year. Publishing is a popular industry, but it’s very London-centric, it doesn’t always pay the best wages, and London will be a battleground for a shrinking pool of graduate talent this year. And we know that graduates are declining job offers because of the strong position they find themselves in. Smart companies will acknowledge that in a market where graduate talent is in demand, it makes sense to broaden their options. Graduates have no need to lose sleep over it.

And finally, last year, Penguin did this to recruit new marketing talent. ‘The Scheme’. Open to anyone, regardless of qualifications. Yes, they already did this last year. But it got a lot more column inches in 2016. Penguin have some savvy marketers.

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The 2016 graduate labour market in the UK

2015 turned out to be quite a positive year for the UK graduate labour market, so let’s take a look at what the new year might hold. As always, we will come back in 12 months to see how these predications fared.

And the first prediction carries on where we left off in 2015.

Getting used to skills shortages and recruitment difficulties

Recruitment difficulties and skills shortages were a feature of 2015 and they will be, if anything, even more central to the UK graduate labour market in 2016. We now have widespread graduate shortages across a range of key sectors, in engineering, in building and construction, in teaching, in health, in IT, in business services and in niches throughout the economy. Shortage of available graduates is affecting the ability of a minority of businesses and sectors to meet demand, and we should probably expect these difficulties to spread to other parts of the economy. 2016 will be about businesses learning to live with not always being able to find graduates when they need them and making plans to mitigate or avoid shortage. We’re not in 2011 any more.

Broadly positive employment outlook

Employment intentions are still up, but the rate of increase is slowing. Some employers, especially those in professional or IT services who had recruited strongly in the last year, may get more cautious on hiring as skills shortages make it harder to recruit, but overall we will likely see modest improvements in the graduate employment market and an increasingly benign jobs market for new graduates – although that doesn’t mean we can or should expect every new graduate to find work easily, or that those who don’t are failing.

But we do need to be careful. The outlook for manufacturing employment is not as positive, affected by weak export markets, by the continuing downturns in steel and in oil and gas, and by skills shortages. There are other factors at play that affect confidence as well….

An uncertain Euro referendum

I can’t bring myself to use the phrase ‘Brexit’, but 2016 looks likely to see a referendum on membership of the EU at some undeclared point, there will be a vicious media campaign, and leaving the EU is not considered likely to be positive for the economy in the short term. Business confidence is likely to be affected if it looks as if there is the prospect of a Brexit (now look what I’ve done), and a reduction in confidence means a weakening of the economy, and a weakening of employment intentions. A portion of the political skirmishing is likely to feature more rhetoric – and possible action – on curbs on immigration, which will exacerbate skills shortages.

Keep an eye on wages

Low inflation is keeping a lid on wage rises in many sectors, but skills shortages mean that some in-demand professions (especially in engineering, IT and professional services) are seeing much stronger wage pressures. The big question is about the salary expectations of the new cohort of graduates – the first to have paid the full £9,000 a year for the duration of their degrees. The repayment threshold of £21,000 means that many graduates in professional employment will start repaying from day 1 – will we see wages rises (as employers were predicting in 2011)? Will we see the rise of jobs paying £20,995 rather than £21,000? 2016 will be an interesting year for graduate wages.

The urbanisation of graduate work

Graduate employment is concentrated in cities, and that shows no sign of of changing soon. Over 40% of the working population in Newcastle, Manchester, York, Sheffield, Leeds, Bristol, Bath, Oxford, Cambridge, Cardiff, Swansea, Newport, Aberdeen, Dundee, Edinburgh and Glasgow had a degree or equivalent at the end of 2014, and when we get figures for 2015, Liverpool, Nottingham, Leicester, Birmingham, Coventry, Norwich, Ipswich and Southampton could all have joined the list. For graduates looking for work – look to the cities. Smaller urban areas, and rural areas, will have some roles, but mainly in a public sector which is likely to continue to lose jobs.

For policy – graduates will play an increasingly important role in urban economies, and we need to get to grips with a future where the largest group of employees in many of our cities – in some cases a majority, and not just in London – will have degrees.

There are undoubtedly more themes that will emerge in 2016 for the graduate labour market, and I’ll keep you posted if and as they do. Happy New Year everyone.

 

Charlie’s Crystal Ball – how did I do in predicting the graduate labour market in 2015?

It’s the most wonderful time of the year – a time when I get to look at what I said 12 months ago and see whether it turned out to be right. Or, alternatively, the bit where I mark my own homework and declare myself a genius.

This time last year I made five predictions about the graduate labour market. Let’s go through them one by one.

Continue reading Charlie’s Crystal Ball – how did I do in predicting the graduate labour market in 2015?

What’s going on in the graduate labour market?

It’s been a busy old summer.

This isn’t another blog about the Green Paper – much ink has been spilled on that subject already and more will be in the future, I am sure. But it is about some of the issues that are brought up in the Paper and will arise in the course of debate and implementation.

First, what is the current state of the labour market for graduates? The answer is reasonably simple – the recession, at least for graduates, is over, we are in recovery and prospects for new graduates are what we’d expect from a reasonably healthy graduate jobs recovery. The evidence is manifold, but perhaps the simplest comes here, from historic early unemployment rates for graduates as shown in the graph below.

historic unemployment rates for UK domiciled first degree graduates since 1976
That’s a lot of recessions.

We’re clearly in a state of falling graduate unemployment (note how often we end up in graduate recession, though). The early part of 2015 had a great deal of positive news, but the second half suggests that the rate of recovery has slowed and we can see that hiring intentions are slowing, especially in manufacturing. I would expect things to improve marginally this year and then flatten out in 2016 – but as we can see from the graph, we’re getting close to historic lows in the early graduate unemployment rate anyway.

This has a number of effects, but probably the most crucial is in skills shortages. This is where the Green Paper can come across as a little misleading. The Paper acknowledges that employers are now struggling to find the graduate skills they need, but the section, ‘The Productivity Challenge’ says the following

However, at least 20% of graduates are not working in high skilled employment three and a half years after graduation, and most employers of STEM graduates are concerned about shortages of high quality applicants

and then follows with

Too many organisations find it hard to recruit the skilled people they need; this poses serious risks to the competitiveness, financial health and even survival of many businesses. Surveys by the UK Commission for Employment and Skills (UKCES) reveal a sharp rise in skills shortages. Such deficiencies are longstanding in some sectors, preventing us from rebalancing the economy and underlining the need for decisive action.

So, what’s happening? Let’s look at the second point first, ‘most employers of STEM graduates are concerned about shortages of high quality applicants’. This comes from a new paper by the Institute of Employment Studies and HECSU for BIS, “Understanding employers’ graduate recruitment and selection practices”, of which, happily, I am a co-author. What’s actually going on is, as the UKCES Employer Skills Survey also shows (and I spent most of the summer looking at this data), we just don’t have enough graduates applying for jobs in a whole swathe of graduate roles across the economy. Not just in STEM, although engineering in particular is affected, but across most sectors, including health (we are so short of nurses), manufacturing, finance and business services. As the Bank of England wrote in July.

Recruitment difficulties had edged up and were at levels last seen during 2007, having broadened recently across a wide range of skills, levels of experience and occupations. For example, reports of a scarcity of experienced middle and senior managers had become fairly common. … In consequence … apprenticeship, graduate and school-leaver recruitment programmes had been either maintained or increased.

Recruiters are concerned with getting enough talent, and with retaining that talent when they have it, and there’s little evidence of those issues easing at the moment.

Let’s now turn to the first point, “However, at least 20% of graduates are not working in high skilled employment three and a half years after graduation”. As we address in great length in Chapter 2 of the new report, there is no consensus on what a graduate job is, nor are we actually sure what a high-skilled job is, but there seems to be a lot of evidence mounting that even were you to identify what these terms might mean today, the nature of industrial change is such that a job that might be ‘non-graduate’ or ‘low skilled’ this year may no longer be in three years time. Just today we had news that exactly these forces seem to leading the College of Policing to conclude that police officers should now have degrees. At present, we are using definitions of ‘graduate job’ and ‘high-skilled employment’ that are based on an occupational classification system developed before the recession and not designed for that purpose, and so it is difficult to be clear what these measures really mean.

So, where are we now? The market has recovered, most graduates will get jobs quickly (although that’s always been the case) and there are several areas where there are not enough to meet employer demand. These are the current challenges in graduate recruitment. We are not in a situation where, broadly, we have too many graduates chasing too few jobs, although we might in individual industries. We do have a mismatch between supply and demand but that is often not because graduates are not good enough but because in a time of relatively healthy graduate prospects, many employers are now finding that their offer is not attracting the graduates that they want. Are the graduates there at all? Do they need to refine their offers? Whatever the answer, the labour market for graduates is not the one we had started to get used to from 2008, and we all need to adjust.

Can we use outcomes data as a proxy for institutional quality?

There is a lot of talk at the moment about using outcome-related metrics (often as part of the proposed Teaching Excellence Framework) as a measure of institutional quality.

Gordon McKenzie outlines some of the challenges here on WonkHE, whilst Steven Jones, writing for the Guardian, delivered a good summary of the seven rules the Framework ought to follow.

Continue reading Can we use outcomes data as a proxy for institutional quality?

The 2015 graduate jobs market – how will it look?

Enough back-patting, let’s look at the 2015 graduate jobs market. This is a lot trickier than 2014, to be honest – in fact, it’s probably the hardest to predict since the recession because of – well, you can take the second reason to work out why.

As this is my blog, I’m permitting myself some opinion in italics.
So, let’s start with the first prediction:

Economic recovery – slow and patchy

This is a slow recovery and a lot of people are concerned about issues that could blow it off course. My feeling is that the economy is likely to continue a basic upward trend, but it may not be as strong and sustained as it was in the last 18 months. I’d expect the outcomes for graduates from 2014 to be slightly better than 2013, especially in building and architecture, engineering and financial services (and computing!). By the end of the year, we still won’t be back to where we were before the recession.

Added for High Peak Data – I have never been someone who thought that the recession was such an epochal event that the graduate jobs market would never recover. I expected the recession/recovery cycle to take about a decade, but I am starting to come to the view that we may need, at the very least, to see an end to public sector job losses, to get back to a pre-recession graduate labour market.
Uncertainty and the election

Uncertainty is back, and that breeds labour market caution. There are a lot of big things going on – we saw how much this can affect things in the second half of the year when the Scottish referendum brought an awful lot of uncertainty to graduate recruiters and the jobs market was disrupted. We have a General Election in May and that’s going to affect the graduate jobs market. This isn’t the blog for dissecting the right and wrongs of political policies, but some do have an effect on graduate recruitment.
Continuing public sector cuts will disproportionately affect the employment of graduates, particularly women and those outside the south east and if enacted that will probably mean more concentration of jobs in London and the overheated housing market there. Curbs on foreign students won’t have an effect on unemployed home graduates – they’ll just mean more hard-to-fill vacancies for recruiters and more skills shortages, with an effect on growth and on wages. And if business doesn’t think a new Government’s economic policy provides a stable platform for the national finances, they’ll be reluctant to invest – and that means fewer jobs.
But the most likely outcome of the election is a Government with a small majority and little room for manoeuvre, possibly a coalition of parties with often differing economic and social priorities, or even a minority Government. This doesn’t breed economic certainty and a lot of decisions are likely to be deferred until after May.

There is the argument that, economically, the two main parties are not that different (which, personally, I don’t buy), and that the paries , but we’re in the sphere of business confidence here and perception and belief are important. Once business has a chance to digest the election results and to work out medium-term effects, we’ll see more stability.

Oil

Very much a double-edged sword here. A lower oil price is good for the running costs of business and that might make them keener to recruit. Logistics, for example, is seeing skills shortages and may be a promising hunting ground for graduates looking for a less conventional challenge. But the big graduate success story of the last few years, Aberdeen, is already seeing belts being tightened and facilities being mothballed. A few more months of low oil prices is not going to be great for that part of the world and not for the jobs market for engineers and geologists, although both are in demand.

A lot of this will depend, of course, on how low the oil price gets and how long it stays there. A short period of low oil prices won’t have much of an effect, but a long period will.

The regions – again

I could pretty much cut out last year’s prediction and put it in here. London will continue to thrive and may continue to capture a larger share of the graduate jobs market. The REF 2014 results will not help, as they could drive a greater concentration of HE funding to the capital and south east. The larger cities – Birmingham, Manchester, Leeds, Edinburgh, Glasgow, Cardiff, Belfast – will continue to do well, with other cities with reasonable graduate jobs markets, including Bristol,  Newcastle, Sheffield, Nottingham, Leicester, Liverpool,  Oxford, Cambridge, Norwich (I’ve doubtless missed somewhere important), as well as the commuter towns and regions of the east and south east, will probably also see opportunities. But outside those areas  graduates looking for work may not find a great deal, particularly if public sector employment continues to fall. Some towns or regions with a strong engineering sector, like Derby, Lancashire and Warwickshire may find that a demand for engineers boosts the local economy.

One of the hidden effects of the recession appears to have been to affect the proportion of graduates staying on in the city they studied. It seems to have fallen and this looks to me to be at least in part as a consequence of public sector cuts, especially in health and local Government. We also need to be mindful to monitor whether successful local cities may be drawing skilled roles away from other parts of the same region that need them – the graduate labour market in the north west, for example, may be getting more concentrated in Manchester. 

Skills shortages and wages

There are clear signs of skills shortage in the graduate jobs market, in engineering and parts of financial services. Added to this, the ONS have noted that professional level roles are seeing wage rises above inflation. This suggests we might start to see increased starting salaries and pay rises for graduates – at least those in jobs that are in demand. I’m not so sure about engineers, though – a lot depends on how the oil and gas industry, which has been driving up wages, responds to low oil prices. Of course, higher salaries mean higher costs for business, so we will have to monitor business confidence.

How prepared is UK plc for recovery? Yes, increased business, but also increased skills shortage, employee turnover and wage pressure. Graduate retention is already a hot topic for recruiters, but it may become harder as employees become more confident and more inclined to look for moves.

In summary

 We’re still in a shallow but sustained recovery, and so the likelihood is that we’ll see a modest improvement in the prospects for graduates in 2015, but probably not as much of an improvement as we saw in the last 18 months. There is a lot of uncertainty about, particularly with an election in 5 months, and with oil prices dipping. London is likely to continue to be strong, and there’ll be opportunities in the larger cities, but other areas may not fare as well. Skills shortages in some sectors, particularly in technical areas like engineering and computing, may start to bite and salaries might start to rise.

Am I right? I guess we’ll see in a year. Good luck to everyone in 2015.

Charlie’s Crystal Ball – how did I do predicting the 2014 graduate jobs market?

This is taken from my work blog, but it worth sticking here along with the companion piece.
The start of the year is a time for traditions, and one of the blog traditions is that I pretend to hate making predictions and then do exactly that, but first, let’s check if it’s worth actually reading them, by examining last year’s speculation and seeing if I were right.

I predicted:

STEM – on the up?

The jobs market will probably improve for graduates from most science and engineering disciplines – particularly for engineers, who have really suffered over the last few years. Although there may well be growth in employment in small specialist engineers, especially those with a good export presence, engineering recruitment will continue to be dominated by the larger firms, and if you want to gauge the engineering jobs market as the year goes by, you could do worse than keep an eye on the big players. I’m not sure that the prospects for biology graduates will necessarily improve though – their jobs market seemed to worsen last year.

Yep, pretty spot on, although biology graduates did see a slight improvement in their fortunes. It wasn’t much, though.

Financial and business services to grow

Economic recovery in the UK will necessarily involve growth in finance and business services. Marketing and PR has been a graduate success story in the last few years and has been drawing graduates in from all sorts of disciplines – the rise of digital media and content means that graduates with good IT skills have a niche in marketing – and I don’t see any reason why that won’t continue. I’m not sure we’ll see a huge increase in financial services recruitment but we will probably see a little growth.

Right here as well. Financial services is interesting, though and will bear close inspection in 2015.
 

Cities on the rise

Although things are broadly positive, this recovery doesn’t look very evenly shared out at the moment. It’s pretty focussed on London and the south-east, although I’d expect those cities that have weathered the recession reasonably well – Edinburgh, Glasgow, Leeds, Birmingham, Manchester, in particular – to probably share some of the joy. Aberdeen’s unique jobs market will probably mean another good year for engineers and technical graduates wanting to move up there. But if you’re outside those areas, particularly if you’re in a smaller town, or in the north of England or Wales, you probably won’t see much of a sign that the graduate jobs market is picking up at least at the start of the year. I expect regional and local differences to become more pronounced in the early part of the year – more graduates in the north-west and north-east moving to Manchester and Newcastle respectively, more graduates everywhere heading for London. It remains to be seen whether it’ll be a temporary phenomenon or whether a small but subtle permanent realignment of skills concentrations is underway.

The regional agenda became more important during 2014 as it became more clear that the benefits of recovery were not being equally shared. I’d say I was reasonably right – I may have missed Newcastle, Cardiff, Sheffield and Belfast from the list – but I was hoping for a bit more even growth around the country. Aberdeen is another interesting case – I’ll talk about that in my 2015 predictions.

In summary

I think the Class of 2014 will find the jobs market a little more welcoming than their counterparts from the last two or three years. Not where it was pre-recession, but a little kinder. Unemployment in DLHE will be about 8% and starting salaries around £20k as they were this year. They’ll still have to work hard – very hard in many cases – to find work, but they might find it a little easier and they’ll have careers staff who are now well-versed in recession job-hunting to help them out. Happy New Year, and good luck to everyone.

If anything, I erred on the side of caution – actually, the overall market improved more than I expected.

I also suggested that other reports of a surge in the IT market were a bit overblown and that computing graduates would still have high unemployment rates. Well, I was half right. Computing graduate unemployment rates are still high, but the IT market did improve markedly and there are now skills shortages. I’m trying to get to the bottom of how both these things can be true at the same time with the help of data kindly provided by the UKCES, so watch this, and other, spaces.

So, in the end, I really didn’t do too badly at all. I clearly have terrifying psychic powers, like a graduate labour market Professor X.

Next up, using those powers for good by making predictions for 2015.

Running Order Squabble Fest – how being late to present at a conference made me think about widening participation.

(An Insight Into The Creative Process Of the Itinerant Researcher.)

I presented at the Universities Association for Lifelong Learning (UALL) Networks event in Leeds last Thursday, at the Tetley. Incidentally, I can thoroughly recommend breweries as a place to hold events, although if, like me, you are late to your own presentation it calls certain competencies into question.

Continue reading Running Order Squabble Fest – how being late to present at a conference made me think about widening participation.

What’s a graduate job? Some thoughts on Green and Henseke.

I have been reading Francis Green and Golo Henseke’s interesting stab at defining a new indicator for graduate jobs, published at LLAKES, the Centre for Lifelong Learning and Life Chance in Knowledge Economies and Societies, here.

Continue reading What’s a graduate job? Some thoughts on Green and Henseke.

UniverCities and graduate retention

The UniverCities report from the City Growth Commission that came out this week has a number of interesting things to say about graduate retention and migration.

(The authors kindly asked for my views and I am credited in the report).

Continue reading UniverCities and graduate retention